Since 2005, over 10M SF of older office inventory has been converted to either new or fully renovated office product, or to an alternative property type. In the DC metro area specifically during this same period, approximately 59% of office inventory was converted to a new or fully renovated office building.
Delivery of converted product in the last decade has been uneven overall. The highest number of converted offices will be delivered this year, with the delivery rate remaining elevated through 2016.
Compared to past recovery periods, office tenant demand has been rather lackluster. Tenants tend to lease Class-A office space instead of Class-B space, which is harder to backfill. Given this trend, we expect older office conversions to continue in the near-term.
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